Founder Data ReportSmall Employers Have the Lowest Quit Rate in the Economy. The Trouble Starts at Your Tenth Hire.
You can’t afford to risk your business without a Sidekick at your side.
Federal turnover data is published by employer size, and it does not say what most founders assume. The businesses that lose people fastest are not the smallest ones — they are the ones that just finished growing.
Quick answer: No. Across the 12 months through July 2026, establishments with 1 to 9 employees had a monthly quit rate of 1.56% — the lowest of any size band below 5,000 people, and well under the 2.15% total-private average. The quit rate then rises as you grow: 2.37% at 10-49 employees and 2.52% at 50-249, which is the peak for the whole economy and about 62% higher than the smallest band. Above that it falls away again — 1.68% at 1,000-4,999 and 0.84% at 5,000 and up. Turnover is not a small-business disease you outgrow. It is something that arrives when you stop being small.
- Monthly quit rate, 12-month average through July 2026: 1.56% at 1-9 employees, 2.37% at 10-49, 2.52% at 50-249.
- The peak is 50-249 employees — roughly 62% above the smallest band, and higher than any other size class in the private sector.
- Very large employers are the calmest of all: 0.84% a month at 5,000-plus.
- At 1-9 employees only 52.2% of departures are voluntary. By 50-249 it is 64.8% — the mix flips from you letting people go to them choosing to leave.
- These are establishment size classes, not firm size classes, and they are not seasonally adjusted — which is why every number here is a 12-month average.
- A monthly rate is separations per 100 jobs, not the share of your people who walk. Do not read it as a headcount.
The number does not do what everyone expects
Ask a room of small business owners whether they lose people faster than big companies do, and every hand goes up. It is one of the few things founders are certain about. We cannot match the salary, we cannot match the benefits, we cannot match the career ladder, so of course our people leave and theirs stay. It is the standard explanation for a standard pain.
The federal government measures this every month and publishes it by employer size. The Job Openings and Labor Turnover Survey — JOLTS — asks establishments how many people were hired, how many quit, and how many were laid off or discharged, and it breaks the answers out into size bands. The data has been running for years. Almost nobody in the small business world quotes it.
When you do quote it, the certainty falls apart. Establishments with 1 to 9 employees run a quit rate of 1.56% a month. The total private average is 2.15%. The smallest employers in America are not bleeding people faster than everyone else. They are losing them more slowly than almost everyone else.
The two bands carrying the highest rates are shown in orange. There is no good or bad direction being asserted here — a size band is not an outcome — so the remaining bands are neutral.
Source: U.S. Bureau of Labor Statistics, Job Openings and Labor Turnover Survey (JOLTS), series by establishment size class, total private. Retrieved from the BLS public data API on September 4, 2026; latest reference month July 2026. Size-class series are published for total private only and are NOT seasonally adjusted, so every figure shown is a 12-month average covering August 2025 through July 2026 rather than any single month. Rates are monthly: separations during the month as a percent of employment. JOLTS counts ESTABLISHMENTS — a single physical location — not firms, so a nine-person branch of a national chain sits in the 1-9 band alongside a nine-person independent business. Bars are scaled to the highest rate shown.
The peak sits where you are about to be
Follow the bars up and the shape is not a slope, it is a hill. From 1.56% at 1-9 employees the rate climbs to 2.37% at 10-49 and tops out at 2.52% at 50-249 — the highest quit rate of any size class in the private sector. Then it comes back down: 2.07% at 250-999, 1.68% at 1,000-4,999, and 0.84% at 5,000 and above.
That shape has an uncomfortable implication for anyone reading this while planning to grow. The stretch of the curve you are heading into is worse than the one you are standing on. Going from a handful of people to a real team does not solve your turnover problem. On this evidence it is what creates it.
Why would that be? Nothing in the data says. But the shape is consistent with something most founders recognise from the inside. At five people everyone talks to the owner every day and the job is obvious. At fifty, the owner is a name on an email, the job has a title and a description, and the person doing it can finally see what the same title pays somewhere else. You have made the role legible — to your competitors as well as to the person filling it. What large employers eventually buy back with pay bands, internal moves and pensions, you have not bought yet.
Going from a handful of people to a real team does not solve your turnover problem. On this evidence it is what creates it.
At your size, half of it is not them leaving
There is a second thing in this data that matters more to a small employer than the headline rate, and it only shows up when you put quits next to total separations. A quit is voluntary — someone chose to go. A layoff or discharge is not.
At 1-9 employees, quits are just 52.2% of all separations. Almost half of the people who leave a very small employer are not leaving; they are being let go. By the time a business reaches 50-249 people that share has climbed to 64.8%. The composition flips as you grow.
So the small employer’s turnover problem is a genuinely different problem from the one the fifty-person company has, and the usual advice — retention bonuses, engagement surveys, stay interviews — is aimed at the wrong half of it. If half your departures are your own decision, the fix is upstream of retention. It is hiring, role definition, and how long you let a wrong fit run before you deal with it.
50-249 is marked only because it is this article’s comparison point, not because a high voluntary share is the good outcome. Neither direction is: a business with few quits because it discharges people instead has not solved anything.
Source: U.S. Bureau of Labor Statistics, Job Openings and Labor Turnover Survey (JOLTS), series by establishment size class, total private. Retrieved from the BLS public data API on September 4, 2026; latest reference month July 2026. Size-class series are published for total private only and are NOT seasonally adjusted, so every figure shown is a 12-month average covering August 2025 through July 2026 rather than any single month. Rates are monthly: separations during the month as a percent of employment. JOLTS counts ESTABLISHMENTS — a single physical location — not firms, so a nine-person branch of a national chain sits in the 1-9 band alongside a nine-person independent business. Voluntary share is calculated here as the quits rate divided by the total separations rate, both 12-month averages; BLS publishes the two series separately and does not publish this ratio.
What the rate means in a year, and what it does not
A monthly rate is hard to feel. Carried across twelve months, 1.56% at the small end works out to roughly 18.7 voluntary departures a year for every 100 jobs, against about 30.2 at 50-249 employees. Counting every kind of separation, it is roughly 35.9 per 100 jobs a year versus 46.7.
Read that carefully, because it is easy to turn into a number that is not true. It is separations per 100 jobs, not the share of your people who leave. One position that turns over three times in a year contributes three separations, and a business with ten jobs is not losing four people out of ten. The rate describes churn in the seats, not a headcount of humans walking out.
The other caution is what JOLTS is counting. These are establishments — single physical locations — and not firms. A nine-person branch of a national retailer sits in the 1-9 band next to a nine-person independent shop, and the branch brings the parent company’s pay scale and HR department with it. That almost certainly flatters the small band. It is the main reason to treat the level as approximate and the shape of the curve — up through the middle, down at the top — as the finding.
Neither column is the good outcome, so neither is highlighted. The small employer’s lower quit rate is not a win when nearly half of its separations are involuntary.
Source: U.S. Bureau of Labor Statistics, Job Openings and Labor Turnover Survey (JOLTS), series by establishment size class, total private. Retrieved from the BLS public data API on September 4, 2026; latest reference month July 2026. Size-class series are published for total private only and are NOT seasonally adjusted, so every figure shown is a 12-month average covering August 2025 through July 2026 rather than any single month. Rates are monthly: separations during the month as a percent of employment. JOLTS counts ESTABLISHMENTS — a single physical location — not firms, so a nine-person branch of a national chain sits in the 1-9 band alongside a nine-person independent business. Annual figures are the 12-month average monthly rate multiplied by 12. That is a rate per 100 jobs, not a count of distinct employees: a single position that turns over more than once in a year contributes more than once.
Unlike quits, the involuntary rate barely moves across the small and mid bands. What changes with size is how many people choose to go, not how many are let go.
Source: U.S. Bureau of Labor Statistics, Job Openings and Labor Turnover Survey (JOLTS), series by establishment size class, total private. Retrieved from the BLS public data API on September 4, 2026; latest reference month July 2026. Size-class series are published for total private only and are NOT seasonally adjusted, so every figure shown is a 12-month average covering August 2025 through July 2026 rather than any single month. Rates are monthly: separations during the month as a percent of employment. JOLTS counts ESTABLISHMENTS — a single physical location — not firms, so a nine-person branch of a national chain sits in the 1-9 band alongside a nine-person independent business. Layoffs and discharges are involuntary separations initiated by the employer. Bars are scaled to the highest rate shown, which is why a nearly flat series still fills most of the track; read the printed values, not the bar length.
None of this says your turnover is fine. It says the story you have been telling yourself about it is probably wrong, and that the version of your business most at risk is not the one you have now — it is the one you are building toward. The founders who get through that stretch tend to be the ones who put the boring machinery in before they need it: what the job actually is, what it pays and why, who someone talks to when they are unhappy, and what the next two years look like for them. None of that is expensive at ten people. All of it is expensive to retrofit at fifty.
Frequently Asked Questions
Do small businesses have higher employee turnover than large companies?
Not on the federal data. In the 12 months through July 2026, establishments with 1 to 9 employees averaged a monthly quit rate of 1.56%, below the total private average of 2.15% and below every size band except those with 5,000 or more employees (0.84%). The highest quit rate in the private sector belongs to establishments with 50 to 249 employees, at 2.52%.
At what company size is employee turnover worst?
Between roughly 10 and 249 employees. The quits rate rises from 1.56% a month at 1-9 employees to 2.37% at 10-49 and peaks at 2.52% at 50-249, then falls back to 2.07% at 250-999 and 0.84% at 5,000 and above. The relationship between size and turnover is a hill, not a slope.
What is a normal monthly quit rate for a small business?
For establishments with fewer than 10 employees the 12-month average through July 2026 was 1.56% a month, or roughly 18.7 voluntary departures a year per 100 jobs. Bear in mind this is a rate per position rather than a count of people, and JOLTS measures establishments rather than firms, so small branches of large companies are included in the band.
How much of small business turnover is people quitting versus being let go?
At 1-9 employees, quits account for about 52.2% of all separations — so close to half of the departures are employer-initiated layoffs or discharges. That share rises with size, reaching about 64.8% at 50-249 employees. Small employers have a hiring and role-definition problem at least as much as a retention problem.
Why does turnover rise when a small business grows?
The data shows the pattern but does not explain it. A plausible reading is that growth makes roles legible: a job that was defined by daily contact with the owner acquires a title, a description and a market price, which makes it easier for an employee to compare and easier for a competitor to poach — while the business has not yet bought the pay bands, internal moves and benefits that large employers use to hold people.
Published by The Lonely Entrepreneur — the community and coaching platform for entrepreneurs who are building alone. lonelyentrepreneur.com
This article is for educational purposes and is not a substitute for professional financial or legal advice.